L&HIllinoismedium
What is the primary effect of including a spendthrift clause in the settlement provisions of an Illinois life insurance policy?
AIt accelerates the death benefit for terminal illness
BIt guarantees a minimum interest rate of 4%
It protects unpaid settlement proceeds from claims of the beneficiary's creditors and from voluntary assignment
DIt allows the beneficiary to cash out the entire balance at any time
Why this is the answer
A spendthrift clause in an Illinois life policy operates with the settlement option to prevent the beneficiary from assigning, anticipating, or pledging future payments and to shield those unpaid installments from most creditor claims. Once installments are actually paid out to the beneficiary, they generally become reachable; the clause's protection applies prospectively to proceeds still held by the insurer.
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